Corporation Law

In Australia corporations are registered and regulated by the Commonwealth Government. Corporations law has been largely codified in the Corporations Act 2001 (Cth). The Act is the result of a successful High Court of Australia challenge in New South Wales v Commonwealth (1990) 169 CLR 482 ('The Corporations Act Case'). The Commonwealth was found to have insufficient power to legislate in relation to the formation of companies. Section 51(xx) of the Australian Constitution was found to only provide sufficient power for legislation applicable to foreign corporations and corporations already formed within the Commonwealth. To some extent, the Act was an outcome of the resolve of the Federal Parliament to establish modern national laws to govern corporations and the securities market so as to establish the governing rules and to provide a pyramid of graduated responses where the law was shown to have been broken.

The Corporations Act 2001 (Cth), sometimes referred to just as the Corporations Act is presently the largest corporations statute in the world. It is an act of the Commonwealth of Australia. This Act sets out the laws dealing with business entities in Australia at federal and interstate level. Although the focus of the Act is primarily on companies, although it also covers some laws relating to other entities such as partnerships and managed investment schemes. All states have adopted the Act.

The Corporations Act is the principal legislation regulating companies in Australia. It regulates matters such as the formation and operation of companies (in conjunction with a constitution that may be adopted by a company), duties of officers, takeovers and fundraising.

The Act gives statutory force to many common law principles and imposes a number of additional fiduciary duties on directors of incorporated bodies. Breach of statutory duties draws penalties under the Act which range up to $220,000. Under both the common law and the Corporations Act 2001, officers may also be required to pay compensation or to account for profits. In some cases directors may also be disqualified from office.

The Corporation Regulations 2001 (Cth) contains all the regulations made under the Corporations Act 2001.